Exam 1 (Ch 1, 2, 3, 4, 5)

A tax due on the purchase of gasoline is called a(n): Estate tax. Excise tax. Income tax. Real estate tax. Inheritance tax.

Excise tax

When creating a personal balance sheet, which of the following is a real estate asset?: Cash value of life insurance Vacation property Possessions in your home Investments for a dream home Mutual funds

Vacation property

A credit report includes: Credit history. Assumptions made by credit rating agencies. Credit score. Credit expectations. All of these.

Credit history

A loan officer is examining whether or not to will offer you a loan today. Specifically, she is examining your income and debts. Which of the five Cs is the loan officer reviewing?: Character Capacity Capital Collateral Conditions

Capacity

The question "Will you repay the loan?" relates to: Character. Capacity. Capital. Collateral. Conditions.

Character

Risks associated with most financial decisions are easy to measure: True or False

False

Rebecca Gladlyn budgeted $375 for a new wardrobe in June. She actually spent $408. What is her budget variance?: $408 deficit $33 deficit $783 deficit $33 surplus $375 surplus

$33 deficit

Given the following information, calculate the net worth:Assets = $7,000Cash inflows = $6,500Cash outflows = $4,000Liabilities = $3,000: $500 $1,000 $2,500 $3,000 $4,000

$4,000

Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt-payments-to-income ratio?: 8% 13% 17% 19% 20%

19%

Given the following information, calculate the debt payments ratio:Liabilities = $24,500Liquid assets = $4,900Monthly credit payments = $800Monthly savings = $760Net worth = $72,500Current liabilities = $1,600Take-home pay = $2,300Gross income = $3,500Monthly expenses = $2,040: 33.79% 3.06% 2.40% 34.78% 21.71%

34.78%

Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use?: A debit card. A credit card. A stored-value card. PayNearMe. All of these.

A debit card

Which of the following is an example of open-end credit?: An automobile loan, A department store credit card, An installment loan for purchasing furniture, A mortgage loan, Single lump-sum credit

A department store credit card

Which of the following is an example of closed-end credit?: A mortgage loan. A department store credit card. Overdraft protection. A bank line of credit. All of these are examples of closed-end credit.

A mortgage loan

Which of the following will likely provide the most expensive access to funds?: A credit card company An investment company A life insurance company A finance company A payday loan company

A payday loan company

The stages that an individual goes through based on stages in the family and financial needs is called the: Financial planning process, Budgeting procedure, Personal economic cycle, Adult life cycle, Tax planning process

Adult life cycle

Which of the following can result from a failure to repay a loan?

All of these answers may be a result of the failure to repay a loan

Which of the following is a valid reason for borrowing?: Purchasing a car so a homemaker can return to work, Borrowing for a college education, Purchasing a home, Paying for a medical emergency, All of these are valid reasons for borrowing

All of these are valid reasons for borrowing

Which of the following categories would be most difficult to cut from a household budget?: Vacations Lawn services Cable Charitable donations Auto insurance

Auto insurance

Many people make mistakes when managing current cash needs. Which of these is NOT a frequently made mistake?: Borrowing for current expenses, Budgeting spending, Failing to put unneeded funds in an investment plan, Having insufficient liquid assets to pay current bills, Overspending due to impulse buying and using credit

Budgeting spending

Which of the following ratios shows the relationship between debt and net worth?: Debt ratio Current ratio Household ratio Debt payments ratio Savings ratio

Debt ratio

The money left over after paying for housing, food, and other necessities is called: Monthly savings. Discretionary income. Disposable income. Gross income. Take-home pay.

Discretionary income

A commercial bank is the same thing as a credit union: True or False

False

Federal income tax returns must be filed by April 1 of each year: True or False

False

Intermediate goals are usually achieved within the next year or so: True or False

False

The best option for borrowing money at a low rate is to use a payday loan organization: True or False

False

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n): Insurance prospectus, Financial plan, Budget, Investment forecast, Statement.

Financial plan

If you miss payments on a home equity loan, you can lose your: Savings account. Car. House. Retirement account. Furnishings.

House

An advantage of personal financial planning is: The use of low-interest savings, Increased impulse spending, Increased control of financial affairs, More credit card debt, Less monitoring of investments

Increased control of financial affairs

A personal balance sheet presents: Amounts budgeted for spending, Income and expenses for a period of time, Earnings on savings and investments, Items owned and amounts owed, Family financial goals.

Items owned and amounts owed

Which of the following is often considered to offer the least expensive loans?: Banks. Finance companies. Loan companies. Parents or family members. Savings and loan associations.

Parents or family members

A worker's primary goal should be to: Pay his or her taxes using estimates for income and deductions, Pay no income taxes, Pay the average tax rate for people working in his or her industry, Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

Which of the following is NOT a valid reason for borrowing?: Purchasing a new dishwasher, Paying for everyday living expenses, Buying a car to start a new job, Paying for a medical emergency, All of these are valid reasons for borrowing.

Paying for everyday living expenses

Many Americans have money problems because of: Poor planning and weak money management habits, Too many clearly defined goals, Proper use of credit, Not enough advertising to make effective decisions, Controlled spending

Poor planning and weak money management habits

The tax that is a major source of revenue for local governments is called a(n): Estate tax. Excise tax. Income tax. Real estate tax. Sales tax.

Real estate tax

The uncertainty associated with decision making is referred to as: Opportunity cost, Selection of alternatives, Financial goals, Personal values, Risk.

Risk

Common payment choices for everyday activities include all of the following except: Cash, Check, Credit card, Short-term loan, Debit card.

Short-term loan

Payroll deductions for federal government retirement benefits (such as old age, survivor, and disability insurance) are called: Estate tax. Excise tax. Income tax. Real estate tax. Sales tax: Estate taxes. Excise taxes. Social Security taxes. Real estate taxes. Sales taxes.

Social Security taxes

A loan from a pawnshop will be more expensive than one from a bank: True or False

True

Short-term goals are usually achieved within the next year or so: True or False

True

When Ted needs cash, his choices include liquidating savings and borrowing: True or False

True

Which of the following is NOT a component of money management?: Storing personal financial records to document business transactions and legal matters. Creating personal financial statements to measure and assess financial position and progress. Creating a budget. None of these are components of money management. Storing personal financial records, creating personal financial statements, and creating a budget are all components of money management.

Storing personal financial records, creating personal financial statements, and creating a budget are all components of money management

Who is ultimately responsible for supplying accurate and complete information for completing a tax return?: Professional tax preparer IRS enrolled agent Taxpayer Taxpayer's dependents Taxpayer's attorney

Taxpayer

Briefly discuss the #1 thing you have learned and applied from the class so far

Your Answer: I've been learning when you have mortgage you are specifically paying off your debts for instance if you are going to college you need to be able to pay your tuition so that your honest towards the school that you are at. That has accepted you into the program. Another one is when your buying house you need to check to make sure that you are not in debt if you decide to buy a home you would have to remember to pay your utilities so that you don't go into debt that is why it is important to pay your finances so that you don't go into debt for not paying all the utilities that your responsible for. It is also very important to pay your taxes on time so that you don't forget to do it before it is due because that can be hard when you go into debt.

The rising of prices that causes changes in buying power is referred to as ____________ risk: interest-rate inflation income liquidity personal

inflation

The potential for difficulty to convert an investment to cash is referred to as ____________ risk: interest-rate inflation income personal liquidity

liquidity

Louise got caught in a cash flow trap and needed money quickly. Unfortunately, she didn't shop around and she went to a _____. As a result, her annual percentage rate was higher than 375%!: commercial bank check-cashing outlet pawnshop payday loan facility rent-to-own center

payday loan facility